We wrote a report in 2009 about the lack of relief for financially distressed private student loan borrowers. Unfortunately, we have seen little progress in the past few years and in some cases, the situation is even worse for borrowers.

We often try to negotiate with private student lenders on behalf of our clients, but the private lenders rarely offer meanginful relief. Few offer long-term repayment plans and so far, none of these creditors have agreed to loan modifications. Settlements are possible, many say, but only if the borrower can come up with nearly all that is due.

The lenders constantly use the bankruptcy restrictions as a sword. They frequently make comments such as “too bad, your client can’t even file for bankruptcy.” In fact, student loans are dischargeable in bankruptcy, but only if the borrower can prove undue hardship. We have written previously about how hard this is to prove. Most, but not all, bankruptcy courts extend the student loan bankruptcy restrictions to co-signers as well. The courts have been particularly tough on parent co-signers. The students and their co-signers are truly stuck.

In recent years, Wells Fargo and Sallie Mae have announced that they will discharge private student loans on the basis of disability or death. Yet we still hear nearly every day from borrowers who have asked for this relief and have been told it doesn’t exist. At a minimum, these creditors should offer the disability and death discharge relief that they claim to offer and clarify how borrowers or their survivors can obtain these discharges. The lenders that were so happy to dole out credit like candy a few years ago should respond when asked about help for financially distressed borrowers. It is also essential for Congress to act once and for all to restore bankruptcy rights to student loan borrowers.

Even many mortgage lenders have come to realize that loan modifications and other relief are often more cost-effective than foreclosure. There are many problems with the government’s home loan modification programs, but at least the government has recognized the need to push mortgage lenders to offer relief. Where is the relief for the countless student loan borrowers?

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Please understand that we do not provide legal advice about individual cases. This web site includes links to other resources for those who seek individualized legal advice or other help not offered here. This site is for people who already have student loans and want to know more about their options and rights.